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Administration
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| Q. |
Who determines eligibility? |
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| A. |
The employer determines eligibility, however, the employer must make sure the
eligibility is not considered discriminatory. Generally, employers choose the same eligibility for the Flexible Benefits Plan as
they have for their health insurance plan.
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| Q. |
What do the employer and employee save? |
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| A. |
Employee salary reductions are pre-tax for FICA, State and Federal income taxes. Employers save the matching FICA
and the salary reduction is pre-tax for FUTA. Employers do not generally net out any savings in FUTA taxes as FUTA taxes are
paid only up to approximately $8,000 of income.
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| Q. |
Is the Medical Reimbursement Account the same as a Health Savings Account? |
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| A. |
With a Health Savings Account, participants can only make contributions to the account if they are enrolled in a special
high deductible health plan. They can use the funds for eligible medical expenses on a tax-free basis or they can pay penalty
taxes on withdrawn funds and use them for any other purpose. The Savings Accounts can remain with the participant even after
they are no longer employed by the employer.
With a Medical Reimbursement Account, employees do not need to have a health insurance plan with the company to participate.
If they have medical expenses and they fit the company's requirements to participate, they can set up a Medical Reimbursement
Account. The funds from this account can only be used toward the expenses that fall within IRS guidelines, however, the funds
to purchase them are tax-free. Unlike the Savings Account, a Medical Reimbursements Account stays with the employer. However,
if the full election of funds have not been used before an employee's termination, they can still submit claims for reimbursement
if the dates of service were before the date of termination and within the plan year and the grace period is elected.
(see Medical Reimbursement Account, Plan Administration, Termination of Employment for more details)
If an employer adopts and Health Savings Account, they will need to modify their Medical Savings Account to either a Limited
Flexible Savings Account or a High Deductible Flexible Savings Account to conform with Federal Guidelines.
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| Q. |
Do I have to file a Form 5500? |
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| A. |
The IRS does not currently require a Form 5500 for a Flexible Benefits Plan. However, ERISA does require that any
welfare benefit plan, such as the Medical Reimbursement Account Plan with 100 or more participants in the plan year, file a
Form 5500. You should consult with your producer or attorney to determine filing deadlines under ERISA.
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| Q. |
How do I communicate election changes and terminations to Combined Services LLC? |
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| A. |
It is important to submit election changes and terminations to Combined Services in a timely manner in order to avoid
claim under and over payments. Changes can be communicated to Combined Services by using the reimbursement request change form
located in the last section of this manual. This form is also located with other forms on the Combined Services website, or
you can e-mail changes to.
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| Q. |
How often does Combined Services invoice me for the administration of my reimbursement accounts? |
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| A. |
The bill goes out the first day of each month for the prior month. Companies with three accounts or less are billed
quarterly. Please refer to Service Agreement.
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| Q. |
Do the payroll deductions need to be taken out in even increments throughout the plan year? |
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| A. |
Most employers design their plan to deduct in even increments or pro-rata basis based on their payroll schedule. It is most often
taken out in increments weekly, bi-weekly or monthly, but it is based on how each employer's Plan Document is written.
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| Q. |
What happens if I want to make a design feature change in my flexible benefits plan? |
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| A. |
Design feature changes will require amending your current plan document. You should contact Combined Services to discuss
the design feature change that you want to make and Combined Services will then send an amended plan document to you.
There are occasions where the federal government makes a change in design features of a Flexible Benefits Plan. These design feature
changes made by the Federal government fall into one of two categories, either a mandatory change or an option to change. This may
require the employer to amend the plan.
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Employee Participation
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| Q. |
Can employees choose not to participate in the Premium Conversion Plan and why would an employee choose not to participate? |
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| A. |
Yes, employees must be given the choice not to participate. Employees may choose not
to participate for two reasons.
First, employees that elect to participate are lowering their earnings and paying less Social Security taxes into the Social Security
System. As a result, employees may have their Social Security benefits reduced, although the reduction in benefits should be minimal.
Financial advisors generally recommend that the employees take advantage of the tax savings based upon the fact that the tax savings
realized for FICA and State and Federal income taxes should be greater than any minimal loss in Social Security benefits.
Second, employees that elect to have their premiums paid pre-tax have made a binding election during that plan year. That decision is
binding during that year and cannot be changed unless the employee has a "qualifying event" that would allow a change in the
premium election.
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| Q. |
Are there employees that are not eligible to participate in a Flexible Benefits Plan? |
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| A. |
Yes. The list is as follows:
1. Self employed individuals
2. Partners in a partnership
3. More than 2% shareholder in a "Subchapter S" corporation
4. Members in an LLC
In each above cases, the employees of those companies other than the individuals listed above can participate in the Flexible Benefits Plan.
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| Q. |
What is the minimum amount an employee can put in a Flexible Benefits Account? |
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| A. |
Generally, there is no minimum, however, the employer can set a minimum contribution.
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| Q. |
How can participants calculate what they will save with a Flexible Benefits Account? |
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| A. |
Combined Services LLC provides a Medical Reimbursement Worksheet and a Dependent Care Reimbursement Worksheet
for employees to get an idea of what they could save with a pre-tax plan. However, if they need more specific information as to how an account will impact their
budget, they should contact their financial advisor.
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| Q. |
What happens to employee money that is forfeited at the end of the plan year? |
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| A. |
The money that is forfeited by the employee becomes an asset of the Plan. One of the
options the employer has is to use those forfeitures to offset the Plans administrative expenses. National statistics report that on average
employees forfeit 3% of their Medical Reimbursement Account election each year.
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| Q. |
What additional reporting does the employee have to provide at tax time? |
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| A. |
No additional reporting is required by the employee for the Premium Conversion and Medical
Reimbursement Account. The employee's W-2 will provide all the necessary reporting needed by the employee. The employee that has participated in
the Dependent Care Reimbursement Account must file the IRS Form 2441 when filing their Form 1040. The amount that was reimbursed to the employee
during the plan year from the Dependent Care Reimbursement Account will be shown on the employee's W-2.
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| Q. |
Are Flexible Benefits Plans a COBRA eligible benefit? |
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| A. |
Only the Medical Reimbursement Account is a COBRA eligible benefit and only in certain circumstances.
Refer to the Supplemental Forms Section to see the COBRA worksheets for the Medical Reimbursement Account.
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| Q. |
How long should participants keep receipts? |
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| A. |
Participants should keep the receipts for seven years. If, at some point, you need copies of
these receipts you can receive them from Combined Services at a fee. Please refer to your Service Agreement.
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| Q. |
Do participants earn interest on the Flexible Benefits Account? |
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| A. |
Participants do not have to pay interest on claims that exceed their contribution
at any time during the plan year and do not earn interest when their contributions exceed claims at any time during the plan year.
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Reimbursement
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| Q. |
Why must employers make the full election available for the Medical Reimbursement Account to the employee at the start of the plan year? |
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| A. |
The IRS has applied a rule called the "Uniform Coverage Rule" to the account. Therefore, the employer must make the full election available
for the Medical Reimbursement Account at the start of the plan year.
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| Q. |
What must participants submit as proof with their reimbursement request forms that their medical or dependent care expenses were "qualified expenses" for reimbursements? |
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| A. |
In the case where an employee is filing for reimbursement of a medical or dependent care expense, a completed reimbursement request
form and supporting documentation (i.e. explanation of benefits) for the service provided or item purchased are needed. The documentation must include the date of service, the service
provided or item purchased and the amount charged. In cases where an item or service needs a recommendation from a practitioner to be considered a qualified expense
(i.e. massage therapy), the letter will need to be submitted as well.
A credit card slip is not generally accepted as proof of a qualified expense since it typically does not have the information required to prove that a service or purchase was a qualified expense.
(A claim form is included in the Forms & Samples Section).
Requests Forms and supporting documentation can be delivered in person or by mail to: Flexible Benefits Plan, Combined Services LLC, 15 North Main Street, Suite 300, Concord, NH 03301 or scanned and sent by e-mail or faxed to 1 603 224-4256.
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Non-Discrimination Testing
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| Q. |
How often do non-discrimination tests need to be completed? |
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You need to complete and pass a non-discrimination test each plan year.
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| Q. |
Do employers generally pass the non-discrimination tests for the Flexible Benefits Plans? |
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| A. |
Yes. With the exception of some testing related to Dependent Care Reimbursement Accounts. There are several factors,
such as demographics, that play into whether a company will pass or fail non-discrimination testing. Your Combined Services Representative can go over your particular
situation if you have questions.
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Debit Cards
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| Q. |
How do participants who use their debit cards to pay for medical or dependent care expenses prove that they have used it for a "qualified expense"? |
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| A. |
Once a debit card purchase is made by the participant an e-mail notification or a letter is sent to the participant by a
Combined Services Flexible Benefits Claims Analyst, stating that the participant must submit supporting documentation for the purchase. The cardholder will need to provide
documentation that shows that date of service, the service provided or the item purchased and the amount charged. In cases where an item or service needs a recommendation
from a practitioner to be considered a qualified expense (i.e. massage therapy), the letter will need to be submitted as well.
Supporting documentation can be delivered in person or by mail to: Flexible Benefits Plan, Combined Services LLC, 15 North Main Street, Suite 300, Concord, NH 03301 or
scanned and sent by e-mail or faxed to 1 603 224-4256.
If after Combined Services' third request for documentation, the cardholder is unable to provide the proper documentation for the purchase, he/she is required to
reimburse the employer for any expenses that were ineligible or unsubstantiated.
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| Q. |
How will my employees be notified that they need documentation for a debit card purchase? |
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| A. |
Depending on how the employee set up their account, they will either receive a letter in the mail or an email asking
for claim substantiation for the debit card purchase. Please refer to supplemental forms section for a detailed explanation of the process.
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| Q. |
Can a debit card be issued to an employee's spouse and/or dependents? |
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Yes, Combined Services will issue debit cards to spouses and dependents who are 18 years of age and older if requested.
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